This post is written by Susan Bonney and Jacqueline Gayle Bony, USAID Ghana.

In Ghana’s rural, food-insecure northern regions, few women complete school while local customs often push them into early marriages and restrict them from owning land. Despite these obstacles, women constitute a significant portion of the regions’ labor market and are critical to development. 

Since the majority of women living in northern Ghana work in the informal sector, access to finance is critical to improving their livelihoods. However, banks in Ghana are generally reluctant to lend to agribusinesses due to their perceived risks, and women often shy away from applying for loans. USAID’s Resiliency in Northern Ghana (RING) activity addressed these barriers by working with local authorities to mobilize 96,000 women living in northern Ghana to save in small increments and access microloans through village savings and loans associations (VSLAs). Through VSLAs, women saved up to three Ghana cedis a week (i.e. roughly 50 U.S. cents). At strategic times of the year, the women received “cash-outs” from their savings and were also eligible to take loans to purchase items, such as farm supplies, to expand their small business and pay for everyday expenses such as their children’s education, health services, and food. VSLA groups received support from local government extension workers who trained and monitored the groups’ progress.  

Though these amounts saved by each individual may seem small, the women cumulatively saved enough to provide loans to other women of more than $2.6 million over a five-year period. The RING end of project evaluation revealed that nearly 40 percent of the women used loans to purchase inputs for their businesses, such as small farms and shops. According to one local government extension worker who coordinates and monitors the groups’ progress, “VSLAs in beneficiary communities have created a lot of businesses, as people borrow money and start petty trading and farming. The saving capacity of the beneficiaries has increased. Some beneficiaries have also acquired land through their savings with VSLAs.” 

Data indicated that women who participated in the VSLAs felt more empowered and supported. The VSLA groups involve a high level of social trust and engagement among members, and these members take on various leadership roles in their communities. For example, VSLA members may decide to collectively use the interest earned on loans for community programs or to help members in need. One participant noted, “…now we have the confidence to speak in public and now we know and care more about each other”.

Despite their social and economic benefits, VSLAs are insufficient to expand women’s small businesses from the subsistence level to a larger scale. USAID has started to link well-established VSLAs to formal financial institutions like banks and microfinance institutions to increase women’s access to credit, which they use to finance existing small businesses or to develop new ones. USAID plans to work with these institutions to tailor financial products to this market. Increased access to finance will provide a better and more stable life for Ghanaian rural women smallholder farmers and will reduce poverty in northern Ghana.